Portland Cement looks for a new CEO

Published:
07 August 2006

The board of directors of the East African Portland Cement Company (EAPCC) has appointed Mr Ndegwa Kagio as the acting managing director as an interim measure. The board resolved to immediately advertise the position of the managing director of the company. The position fell vacant following the resignation of Mr Zakayo ole Mapelu on Tuesday.

Mr Mapelu had been sent on forced leave early last month to facilitate a probe on the company’s financial management. Prior to his elevation to the position of acting MD, Mr Kagio was the General manager works at the Athi River-based cement company.

The special board meeting was called following the resignation of Mr Mapelu on Tuesday and the subsequent resignation of five other top managers at the firm on Thursday. Those who quit in solidarity with the MD include the general manager (finance), legal affairs manager, human resource and training manager, head of security and environment and the head of corporate affairs. All had joined EAPCC soon after the appointment of Mr Mapelu as the managing director.

Prior to their resignation, the government had reinstated a former human resources manager Mrs Jane Mutua who had been sacked last October by Mr Mapelu. On Thursday, the company put out a statement assuring the public that operations at the cement firm were going on as usual despite the resignations. The former MD’s allies blame his resignation on the behind-the-scenes war with some board members over his push to expand the company’s operations into Sudan and Rwanda.

Mr Mapelu and his team have been credited with turning around the company to post a profit of Sh1.4 billion last year. The turn around was attributed to the sealing of loopholes in the procurement sector and keeping away politicians from running the cement firm. Under Mr Mapelu’s watch, the once heavily-looted EAPCC last year managed to return an operating profit of Sh1 billion in the year ending December 31, 2005, up from Sh820 million. The gains were attributed to sealing of loopholes in the procurement section and the warding off of political interference.

One informed source says that Zakayo Mapelu, was forced out for investing in Southern Sudan without board approval. Mapelu also allegedly engaged a South African company to construct a cement mill in Athi River as the board was waiting for a "business case". The tender to construct the mill cost the company Sh1.8 billion.

According to an Efficiency Monitoring Unit (EMU) report to be tabled before the Board next week, the company also lost Sh7.7 million in a cement deal. EAPCC had delivered tones of cement worth Sh7.7 million to Sudan but only Sh700,000 was paid. EMU officials have since established the company cannot recover Sh7 million from a Southern Sudan firm that acted as its agent.

"The board was waiting for a report on the viability of the Sudan venture only to read it in press. He was opening depots that were not budgeted for," said a source. According to EMU, the cost of delivering the cement to Southern Sudan shot up after Mapelu allegedly took a chartered flight with other senior officials to the country without following proper procedure.

Mapelu’s journey to Sudan was, among other issues, meant to persuade the agent there to pay the money owed to the cement company. Efforts by the company to locate the agent in the war-torn country have failed. An official in the team revealed that the agent, a minister in the Sudan government, had no offices but efforts are being made to recover the money.

The Government controls 25 per cent of the share capital in the Portland company and 27 per cent is held by National Social Security Fund. The French firm Lafarge, which accounts for 55 per cent of the Kenyan and regional market, also has interest in Athi River Mining, with a 15 per cent share.